Rules Applying to IGST for Advertisement Services

Rules Applying to IGST for Advertisement Services

Rules applying to IGST for advertisement services were amended recently via notification dated 15 November 2017. The guidelines state the criteria for allocating the IGST to various States/Union Territories in case of the advertisement services are supplied either to the Central/ State Government, a local authority or even a statutory body as per Section 12(14) of the IGST Act, 2017.

These criteria are applicable in case of no contract between the recipient and the supplier regarding the amount to be to be mentioned on the invoice. Here is a brief below of the major pointers issued as amendments to help you grasp the gist quite quickly.

New Rules Applying to IGST for Advertisement Services

1) Advertisement through publications and newspapers – If the advertisement is done through newspapers or publications, then the invoice is to be raised separately to the state/ union territory in which the newspaper or publication is being distributed regardless of the office location of the publishing house. The amount to be invoiced will be basis the number of copies published in each state/union territory.

2) Advertisements through the printed material – Printed material as per the amendments in IGST for advertisement services includes pamphlets, diaries, leaflets, calendars, T-shirts etc. The rule states that advertisement is done through such pamphlets etc. will require being invoiced separately to each state/UT basis the number of printed copies to each state/UT.

3) Advertisement through hoardings –

3.1 Hoardings other than on trains – When hoardings are displayed in different UT/ states as per the order of the Government agency then the invoices are to be raised state-wise and quantity-wise (number of the hoardings so displayed in each state/UT).

3.2 Hoardings on trains – Amount on the advertisement on the trains is to be invoiced as per ratio of the length of the railway track in each state/UT, from which the train will be passing through. Invoices in this matter also will be required to be issued separately to each of the State/UT considered above.

4) Advertisements on –

4.1 Back of utility bills – In case the advertisements are printed on the back of utility bills of gas or oil companies etc., then amount distributable will be in accordance with the number of bills so distributed in each State/ UT. As per the amendments in IGST for advertisement services, the invoicing shall be done separately to each of the State/UT which are being considered above.

4.2 Back of railway tickets – Advertisement printed on the back of railway tickets will require the invoice calculation as per the ratio of the number of railway stations in the State/UT.

5) Advertisements over radio stations or at cinema halls – In case the advertisements are done via broadcasting over FM radio or at cinema halls, then the amount to be invoiced to each state/UT in which advertisements have been broadcasted, shall be calculated on the basis of amount pertaining to each of the state/UT in consideration, regardless of the place of radio station/ video recording studio.

6) Advertisements on TV channels – The basis of calculation of amounts to be invoiced to State/UT, in case of TV advertisement, shall be the viewership in each of the State/UT. The viewership figures will be the figures published by Broadcast audience research council. If in case, the viewership includes more than one region’s viewership then invoices will be calculated on the basis of the ratio of populations in each of the state/UT in which the advertisement is broadcasted.

7) Advertisements over the internet or via short messaging service (SMS) – The amount of invoice to be issued to the state/UT in case of advertisements done over the internet or SMS shall be calculated on basis of the number of internet subscribers/ telecom subscribers in the State/UT. The number of such subscribers shall be taken from the official site of Telecom Regulatory Authority of India. If the figures involve multi-region (more than one State/UT) subscribership then the ratio of populations of each region shall be the basis of calculation of the amount to be invoiced.

Conclusion

IGST is a part of GST which aims for one nation-one tax. Amendments pertaining to IGST for advertisement services clearly mention two things in each of the abovementioned scenarios which are- separate invoices to be issued as well the basis for calculation of the invoice amount to each state/union territory in which the advertisement service was rendered. These are meant to aid the understanding of the place of supply in case of advertisement services to the Government.